New US job market numbers weaker than expected as Fed eyes interest rate cut

The US job market appears weaker than first thought, according to official figures released on Wednesday.

The US created 818,000 fewer jobs than first calculated in the 12 months to the end of March, a 0.5% decrease, according to the Bureau of Labor Statistics’ quarterly census of employment and wages.

The revision was in line with economists’ predictions but it still suggests that hiring has not been as robust as the official figures first showed. The figures indicate that employers have been adding about 174,000 jobs per month, a solid pace but 28% lower than the previously reported rate of about 242,000 jobs.

The news comes as the Federal Reserve weighs a cut in its benchmark interest rate, the first since March 2020. The chair of the Fed, Jerome Powell, has signaled that the central bank is leaning towards cutting rates after raising them to tamp down inflation.

Minutes from the Fed’s meeting in July were released on Wednesday. “The vast majority” of participants “observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting”, the summary stated.

Powell will give an update on his views this Friday at the central bank’s annual meeting in Jackson Hole, Wyoming.

The news also comes in an election season when the economy is the top priority for voters. The outgoing president, Joe Biden, has received low marks from voters for his handling of the economy despite a remarkable recovery from the coronavirus pandemic. While inflation is fading, voters remain unhappy about prices.

About 16m jobs have been created since Biden took office and average unemployment has remained lower than during any administration in 50 years. But Republicans were quick to seize on the announcement.

“This is the largest downward revision to employment in 15 years,” @RNCResearch said on X (formerly Twitter). The 0.5% revision is the largest since 2009.

The largest downward revision was in professional and business services, which added 358,000 fewer jobs than first thought. In other areas, leisure and hospitality was revised down by 150,000 jobs, manufacturing had 115,000 fewer jobs, and the trade, transportation and utilities category was revised downward by 104,000 jobs.

“Non-farm payroll growth from April 2023 to March 2024 looks to be softer than first thought, but not worryingly so. That supports our view that when the Fed cuts interest rates it will do so in 25bp [basis points] steps, rather than a larger 50bp cut,” Olivia Cross, North America economist at Capital Economics, wrote in a note to investors.